ZPOA - Anything to be aware of/Anyone used?

BeerBelly

Hi - I want to borrow around 9k - over 1 year ideally - Zopa quick check offers you 3 or 5 years and says overpayment is penalty free.

It says if was over the 3 year term a total of around 10k is payable back at payments of £280 a month for 36 months.

2 questions - can I really repay the whole lot back so I am done within a year, penalty free - no hidden exit/closing fees?

How much would I get the interest down by i.e how much would I end up paying in interest if end early?

Does seem a good deal, but interested to see people's experience who has used them - also how do they pay the money? Bank transfer, cheque?

Are they any other hidden costs like admin charges or expensive phoeline to close the account?

Thanks guys

EDIT: Apologies for the spelling mistakes! Can;t change post title - meant to say ZOPA!!

geordieracer

Yes, be aware its called ZOPA not ZPOA

BeerBelly

apologies couldn;t change title post.

in summary, anyone know any of these, pretty please?

- If I overpay each month how and when is interest recalculated or am I simply paying the loan quicker (i.e I still end up paying the full interest)?
- What percent can you overpay by each month?
- If I am lucky enough to come into some money and decide to say pay up within 12 months instead of the 36, are they any closure/exit fee's?
- I get confused with the MArket and Listing loans - if I go with Market am I borrowing from ZOPA or a third party i.e are ZOPA acting as a broker?
- Are Market loans secured/unsecured?
- How is money received? Bank transfer/cheque?

paddyrg

Also look at ratesetter.com, similar deal. They lend at the premium end of the market, not all borrowers accepted. They are a dating agency for investors and borrowers, and they relend any money repaid early. Ratesetter has more upfront charges within the agreement which they use as a buffer fund for bad borrowers, zopa has different rates for individual borrowers to reflect the degree of risk.

IReallyNeedHelp_2

Hi - I have a loan with ZOPA and have found the entire service highly satisfactory.
In answer to your questions - the loan is paid by bank transfer. There is no hidden charges once you agree the loan there is an admin fee when you take the loan but this is worked out into the loan and monthly repayments. Early repayment does not incur any hidden charges and you can pay as little or as much as you like, whenever you like. Interest is calculated daily so you do save yourself a lot of interest by repaying whenever you can afford to. All loans are from members of ZOPA, like you and me who decide to invest. If you borrow from the market or listings you are still borrowing from Zopa members. There are no exit fees.
Any more questions let me know!

jamesd

BeerBelly wrote: »

Are they any other hidden costs like admin charges or expensive phoeline to close the account?

A little hidden. The APR for a three year loan will have about 0.5% of it due to the Zopa fee. If you pay the loan off over one year that'd be around 1.5% so you'll need to add about 1% to the quoted APR to compare it fairly to other one year options.

You can overpay as much as you want, as many times as you want. You can't pay off the most expensive loans first, just all of the individual loans equally (a loan via Zopa is a collection of individual loans at increasing rates, so there would be advantage to clearing the earlier ones first). You can't pay anything extra off around the time of your regular payment.

Any extra payments you make work like a mortgage. They reduce the amount owed and the interest paid from the day of the extra payment. The required monthly payment is reduced after the extra payment.

Yes, Zopa are effectively acting as a broker. Like the mortgage securitisation market they put together packages of individual ten Pound loans to make up a combined loan for the amount you ask for plus their fee.

Usually you'll get a cheaper rate via the markets than via listings. Also you'll usually get a cheaper rate around the fourth or fifth day of the month because repayments are concentrated around the end and the first few days, adding some more money into the system and increasing the availability of cheaper money. Next Friday would probably be a good time to apply if you don't go for a cheaper option elsewhere. Monday would be a bad day, little new money and a month of lending plus the just-ended weekend to drain funds.

You should really check the Cheap Loans and Cheap Credit Card Loans since there are probably cheaper deals available there for you. All personal loans and credit cards are required by law to let you overpay with a charge of no more than 1% of the amount overpaid. Even if you can't get the full amount on a 0% credit card deal it'll cut your costs. Virgin and other MBNA-backed cards do balance transfers from a bank account (which sends money to the bank account) for a 4-5% fee.

Declaration of interest: I have both a package of loans via Zopa and lending and current lending offers there, though the offers are currently unlikely to be matched.

biscit

I thought the rate quoted to borrowers includes the zopa fee. The bit about applying on the 4th of the month when there's more cash in the system is a good observation.

jamesd

Yes, the rate quoted to borrowers includes the borrower fee but it's calculated over the whole term requested. If you're going to pay it off in less time than that it will have a larger effect than the one given, so the effective APR will be higher than the one given.